CANADA: LAYTON PULLS THE PLUG -- THE GOMERY EFFECT

UNCLAS SECTION 01 OF 03 OTTAWA 003317 SIPDIS SENSITIVE E.O. 12958: N/A TAGS: CA PGOV PREL SUBJECT: CANADA: LAYTON PULLS THE PLUG -- THE GOMERY EFFECT ON THE PARTIES, ELECTION TIMING, KEY LEADERS, AND BILATERAL RELATIONS ¶1. (SBU) Summary: NDP Leader Jack Layton announced today that the NDP cannot express confidence in the Martin government, and "the life of this Parliament is limited," after receiving what he considered an inadequate Liberal response to NDP concerns over creeping privatization in health care. Layton did not go so far as to say when he would try to bring the government down and the other opposition leaders were just as cautious, but there is now a greater possibility of a snap-election. This possibility is increased by the recent sharp (albeit probably temporary) rise in Conservative fortunes in the polls. For the U.S. this means further distraction for a weak minority government in Canada, which will remain in campaign mode for the foreseeable future. End Summary GOMERY REPORT PART I EXONERATES MARTIN -------------- ¶2. (SBU) Part I of the Gomery Inquiry was released November ¶1. The report, subtitled "Who Is Responsible?" attempts to assign blame for the scandal while the second report, due out February 1, will make recommendations on avoiding a similar mishap in the future. The report essentially exonerates the current government and, significantly, PM Martin, whom the report stated was responsible as Finance Minister for setting department budgets but not managing them. Former Prime Minister Jean Chrtien and persons close to him took the bulk of the blame for creating and operating the program in a way that left it open to abuse. High-ranking members of the Quebec Liberal Party and several Quebec advertising agencies were also pegged with abusing the program for personal gain, and in some cases to funnel money to the Quebec Wing of the Liberal Party. BUT SO WHAT -------------- ¶3. (SBU) The upcoming "recommendations" section of the report was supposed to draw the greatest attention, but it appears most observers, especially the opposition parties, are more than satisfied to attack the Liberal Government now. It also appears that the Canadian people are not letting the PM off the hook, at least not in the short term. A poll released over the weekend conducted by the Strategic Counsel for the Globe and Mail and CTV news showed the Conservatives ahead at 31 percent and the Liberals at 28 percent, with the NDP also up to 20 percent and the Bloc steady at 12. (Polling data from three weeks ago had the Liberals at 38, Conservatives at 25, and NDP at 17). Results in Ontario put the Conservatives at 35, Liberals at 37, and NDP at 20, also a significant slippage for the Liberals. ¶4. (SBU) Significantly, 60 percent of respondents do not accept the findings that PM Martin was not involved, and 71 percent believe that Martin should be held accountable. Also of interest, both parties are given equally low marks for their ability to clean up the mess (20 percent each). But regardless of how they feel about Liberal culpability for the affair, 60 percent of respondents support the idea of waiting until the 2d report is issued before going to the polls. It would take a lot of scandal to get people here to support a deep winter election. DOES IT GET ANY BETTER THAN THIS? -------------- ¶5. (SBU) What the opposition parties will do with this scandal-driven traction is still an open question. According to Strategic Counsel Chairman Allan Gregg, "the temptation to defeat the government will be overwhelming, since the opposition parties know that when the issue fades, their fortunes will fade with it." Indeed there seems to be new enthusiasm and some buzz coming from the Conservatives about defeating the government, although just when and how to do so is still under review. ¶6. (SBU) Stephen Harper has stated that he will not bring the government down without the NDP on board, presumably because he doesn't want to be painted as being in narrow coalition with the separatist Bloc. He was in Montreal November 7 trying to convince Quebec federalists that the Conservatives are a viable option for those who cannot stomach the Bloc. This comes on the heels of a proposal November 4 for improving government ethics -- a Federal Accountability Act that would implement a series of measures to clean up the ties between private money and lobbyists and politics. The Bloc has said it does not want to see a winter election but was otherwise quiet about its intentions until today. NDP ASSUMES THE OPPOSITION HELM -------------- ¶7. (SBU) The decision then rested with Jack Layton and the NDP. In a speech November 7 Layton answered a letter from Health Minister Dossanjh outlining the government's offer to support the NDP health care position by saying that "what the government is proposing is unacceptable." While stopping short of stating how and when he would seek to bring the government down, Layton said that he "does not believe there are grounds to go forward" with the Liberals and "the life of this Parliament is limited." He suggested that the Canadian people should not have to wait for months to bring the government to account for sponsorship. After the speech Layton clarified that the NDP could not support the Liberals in a confidence motion. Political Analyst Keith Boag said he didn't see much room for future Liberal negotiations with Layton over the issue, although some have suggested that it may be a ploy to gain more leverage. This will be clear within the next day or two. ¶8. (SBU) The Conservatives reacted cautiously to the announcement (in part because Harper spoke without having seen it),while the Bloc confirmed that if the other two opposition parties got their act together to defeat the Liberal government, his party would definitely not support the Liberals. The issue now is when a confidence motion could actually come to the floor. The Conservatives have an Opposition Day on November 15 which has a no-confidence motion waiting on the order paper. Harper had said he would only go through with this if supported by the NDP. The Bloc has its Opposition Day on the 17th and the NDP on the 24th. But the Liberals have been conducting a filibuster of the Commons process over a Bloc Quebecois mailing on the Sponsorship program that could push back some or all of these Opposition Days. The next key date will be December 8 when there is vote on the spending supplemental which will be a firm confidence vote. TIMING IS EVERYTHING -------------- ¶9. (SBU) All of the parties are trying in all of this to avoid being responsible for bringing on an election in "deep winter." The worst case would be responsibility for bringing the election on during the Christmas season, but anything in January would be only slightly less unpopular. It is, however, quickly getting to the point where it will be difficult for the opposition parties to maneuver to avoid a crash by supporting the government as they did for a time in the spring to avoid a summer election. If the NDP does not walk back from today's gauntlet quickly, all three parties will be on record as not supporting the government, and there are no numbers games that could avert a fall in that case. ¶10. And even if the NDP were brought back in the fold, the numbers are currently not in the government's favor. If everyone votes (i.e. no illnesses),and the Independents split 2-2, the Conservatives and Bloc have the votes to bring down the government) The breakdown is: Liberals 133 (minus the Speaker who only votes in a tie) NDP 18 151 Conservatives 98 (three members are ill enough to possibly miss a vote) Bloc 54 152 Independents 4 (former Liberals Carloyn Parrish, David Kilgour, and Pat O'Brien, and former NDP member Desjarlais; in the last confidence vote Parrish and Desjarlais, the latter still in the NDP, voted with the government, Kilgour and O'Brien voted against) Vacancy 1 CANADA'S NEW REALITY SHOW -- LIBERAL SURVIVOR -------------- ¶11. (SBU) The Liberals will be scrambling over the coming days to devise a survival strategy. Speaker Milliken indicated to Ambassador that it would be possible using the filibuster to avert the demise of the government; we certainly saw in the last term that the Liberals have an excellent capacity to manipulate the calendar. Finance Minister Goodale is scheduled to give an annual economic update on November 14 in which he is expected to highlight PM Martin's current and future good stewardship of the economy in what he calls a prosperity plan -- showing that the Liberals have a viable strategy for the future by promoting education and skills training, infrastructure, and research and development. He could still include tax cuts and spending as well. PM Martin has suggested, in what sounds a bit desperate, that the country would not be well-served by a government crash in the midst of its hosting of the climate change conference. But it is difficult to see how they can avoid the moment of truth over the budget vote in early December, and if the NDP doesn't back down fairly quickly and come back to the table, it is equally difficult to see how it would endure. U.S. INTERESTS -------------- ¶12. (SBU) For the U.S. this means simply that the Martin government is far less stable and able to focus at the end of the day November 7 than it was when at the start of the day. It will for the near future be consumed with its own survival and virtually incapable of pursuing ambitious or far-reaching policies. Every initiative or change of policy course will be vetted through the lens of political calculation. If there is a campaign, all sides will need to keep a healthy distance from the United States, and the Liberals and Conservatives will also need to show the ability to work with the U.S. on shared issues while standing up to the Yankees during disputes. It is not clear whether issues like softwood will be a direct campaign prop, but it has of late faded into the background. Who could gain points from it during a campaign is also not clear -- the Conservatives could presumably beat up the Liberals for not having the kind of relationship with the U.S. that would allow them to solve such disputes, while the Liberals could try to show strength by ratcheting up the rhetoric. But the campaign will be fought over the single issue of simple government accountability, and both sides will probably have their hands full managing that one topic. Visit Canada's Classified Web Site at http://www.state.sgov.gov/p/wha/ottawa WILKINS